South African Canegrowers and Farmers urge the government to reconsider the sugar tax, citing its detrimental effects on the industry.
In a joint statement, the South African Canegrowers Association and the South African Farmers Development Association (SAFDA) have made an appeal to the government to scrap the sugar tax or extend the moratorium on increases until 2030, warning that the current tax threatens to collapse the sector.
“The Minister of Finance Enoch Godongwana gave us a two-year reprieve on any sugar tax increases in February 2023 to accord us space to diversify the industry and restructure. However, our intensive research indicates that a period of two years is inadequate for the realisation of product diversification,” said SAFDA Executive Chairman Dr. Siyabonga Madlala and SA Canegrowers Chairman Higgins Mdluli.
Introduced in 2018, the Health Promotion Levy (HPL) was designed to reduce obesity and diabetes.
However, the associations say the tax has wreaked havoc on the sugar industry.
“Since its introduction, the sugar tax has caused a multi-billion-rand revenue loss, job losses, and the closure of two mills in KwaZulu-Natal,” the associations noted.
A NEDLAC study revealed that by 2019, the industry had lost over 13,500 jobs, with 250,000 tons of sugar sales lost in the first year of the tax’s implementation.
Madlala and Mdluli warned that any increase to the HPL or a lowering of the threshold “would be tantamount to undoing all the great work and progress achieved under the auspices of the master plan.”
The farmers are urging President Cyril Ramaphosa’s administration to ensure policy alignment and support to prevent further damage to an industry vital for rural economies.
“We need sufficient time to pursue identified product diversification opportunities as we move from being a sugar industry to a sugar cane-based industry,” they concluded.
The Mercury
Related Topics: